SOCIAL IMPACT MEASUREMENT CHALLENGES: THE EFFECTS ON

SOCIAL ENTREPRENEURS’ ACTIVITIES IN TOWNSHIPS

COMMUNITIES IN SOUTH AFRICA

EMMANUEL INALEGWU AKOH 1 and LAWRENCE MPELE LEKHANYA 2

1, 2
(PhD), Faculty of Management Sciences, Department of Entrepreneurial Studies and Management, Durban
University of Technology (DUT), Durban. Email: 121856837@dut4life.ac.za, 2lawrencel@dut.ac.za
ORCID ID: 1https://orcid.org/0000-0001-8063-4983.: 2https://orcid.org/0000-0002-9104-963X.

Abstract
Globally, social entrepreneurs are recognised for their contribution in addressing socio-economic challenges and
measuring their social impact is considered very important. However, few or little studies have been conducted
on the effects of social impact measurement challenges on social entrepreneurs’ activities. Hence, this study aimed
to investigate and empirically test the effects of social impact measurement challenges on social entrepreneurs’
activities in South Africa, particularly in KwaZulu-Natal (KZN) township communities. The study adopted a
quantitative research approach, using a snowball sampling technique to select 90 social entrepreneurs from three
township communities in the KZN Province. SPSS (27.0) version was used to analyse the data collected. Findings
from the study indicated that the lack of social impact measurement affect SEs understanding the contribution of
their activities, and the methods/techniques to use in addressing social problems. In addition, lack of social impact
measurement affects the ability of SEs to identify other opportunities to solve social problems, and investors
willingness to provide financial support for SE activities. The findings from this study contribute both to the
existing body of knowledge, as well as social sector. The findings from this study will also assist SEs and other
relevant stakeholders to better understand how social impact measurement can enhance social value creation in
disadvantaged communities.
Keywords: Social Entrepreneurship; Social Impact Measurement; Challenges; Townships; Kwazulu-Natal.

INTRODUCTION
In recent years, the concept of social entrepreneurship has been gaining popularity globally,
with many scholars emphasizing its critical role in addressing socio-economic issues in both
developed and developing countries, including South Africa (SA) (Littlewood & Holt, 2018;
Seelos & Mair, 2004; Dzomonda, 2020). SA like many other nations, is faced with a plethora
of socio-economic challenges, especially in local communities like townships. In SA, the term
‘township’ refers to the underdeveloped urban living areas introduced in the early 19th century,
typically saturated by informal settlements; in general, these areas commonly lack adequate
infrastructure and basic amenities such as water, electricity, and health care (Manyaka-
Boshielo, 2017). It is estimated that 21.7 million people are living in townships across the
country, a significant percentage of the almost 60 million population (Schwabe, 2020). With
regards the focus township area for this study (Inanda, Ntuzuma and KwaMashu), 73 percent
of households are unemployed, 77 percent of households earn less than R9 600 per annum, 12
percent have no schooling, 7 percent have completed primary school, 26 percent have matric
or high school, only 4 percent have tertiary education and 43 percent do not have formal houses.
The area comprises of predominantly informal settlements, with high crime rates, lack of public

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space and recreational activities and low level of public services (Banyambona, 2013). It is
therefore critical to employ concepts such as social entrepreneurship in these areas to improve
and address their socio-economic needs. According to the Organization for Economic Co-
operation and Development (OECD), the goal of every social enterprise (SE) is to create social
value, while addressing social challenges and, as such, expected to produce a social impact
(OECD, 2015). In other words, the ability to produce a social impact is a critical condition that
allows any organisation to be identified as a SE.
Social impact measurement could be a powerful tool to assist social entrepreneurs in setting
realistic objectives, to improve their activities, prioritize decisions, and access funding, as well
as support political and policy advocacy (Buckland and Hehenberger, 2021; OECD, 2021).
This means the inability to adequately assess social value and the impact produced by the
operations of a SE might limit their effectiveness in addressing social problems in society.
Alomoto, Niñerola and Pié (2022) mention that measuring, analysing, and evaluating social
impact is crucial to aligning sustainable development strategies of international organisations,
governments and businesses. Hence, the effectiveness of SEs to create social value that will
address socio-economic challenges may be significantly affected by the lack of social impact
measurement.
It has been highlighted that many organisations, including social enterprises, are faced with the
challenge of optimising impact in several dimensions, instead of maximising impact against a
single dimension (Maas & Liket, 2011; Musinguzi, Baker, Larder & Villano, 2023). This could
be one of the challenges affecting SEs in the KwaZulu-Natal (KZN) townships, as social impact
should be individualised and assessed based on the nature of each social initiative, ensuring it
correlates with the process objective (Hadad & Găucă, 2014).
A Global Entrepreneurship Monitor (GEM) (2016) study reveals that only approximately 50
percent of individuals, who fit the broad definition of social entrepreneurs globally, agreed their
organisation puts substantial effort into measuring the social and environmental impact of their
activities. This emphasizes the need for better understanding of the effects a lack of social
impact measurement has on SE activities. For instance, in SA, it is highlighted that less than
10 percent of SEs in fact measure impact, with the vast majority only measuring outputs and
outcomes (Methvin, 2019). This is cause for concern, as Gonul and Senyuva (2020) mention,
it is critical that social ventures plan for and assess their social impact, because the success of
their activities is measured through the sustainable impact and change they create. There are
various metrics highlighted in literature to measure social impact, with each method presenting
different approaches and characteristics (Cunha, et al, 2022). However, context and the impact
being measured are important factors to consider in the choice of metrics to use. This gap could
be challenging for social entrepreneurs.
It is against this backdrop that this study sought to investigate how social impact measurement
challenges affect social entrepreneurs’ activities in KZN townships. It examines from the social
entrepreneur’s perspective to understand what is required to improve their social impact
measurement and enhance their activities. Therefore, this paper seeks to address the research
question: what are the effects of social impact measurement challenges on social entrepreneurs’

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activities in KZN townships?
This article is constructed as follows: first, related literature underpinning this study is
presented, providing an overview of social entrepreneurship, as well as social impact
measurement challenges and effects on social entrepreneurs, both globally and locally. Next,
the methodology used in the study is presented, followed by presentation of the findings and
discussion. The paper concludes with recommendations, limitations, and suggestions for future
research.

LITERATURE REVIEW AND HYPOTHESES

Theoretical background
According to Antoniuk, et al (2023), the spread of social innovation is an important aspect in
strengthening the social component in the context of social value creation. However, social
impact measurement has come to be a critical aspect of social entrepreneurs’ growth and
survival. It is generally believed that for SEs to effectively understand the impact level of their
innovative and creative strategies to help address social ills in society, there needs to be an
adequate measurement.
Many studies have emphasized the importance of social impact measurement for SEs to thrive
in their social value creation. For instance, the European Commission (2014) asserts social
impact measurement is crucial in assessing and analysing whether a social entrepreneur’s
activity or action has created social value or significant change – positive or negative, short- or
long-term, as well as the direct and indirect impact on other organisations and people within
its ecosystem. However, there remains a lack of empirical level studies on the effects social
impact measurement challenges have on SEs’ activities, particularly from the KZN township
perspective. According to Buckland and Hehenberger (2021), underinvesting in impact
measurement results in the lack of evidence SEs need to establish trust in the communities they
operate. This could affect the buy-in and support SEs require in communities to enable them to
achieve their desired goals and objectives.
Social impact measurement could be instrumental in SEs contribution to addressing socio-
economic issues, nonetheless, the level is relatively low according to Methvin (2019), because
many SEs in SA lack information and the ability to differentiate between an output, an outcome
and impact; furthermore, resources required to measure impact are limited; in addition to
longitudinal requirements, where actual impact only occurs many years after intervention; and
the fear of knowing their intervention did not have the positive changes envisaged. These
challenges may hinder impact measurement and could have a significant negative effect on the
operations and successful social value creation of SEs in SA, particularly in the KZN
townships.
Social entrepreneurship
As the concept of social entrepreneurship continues to grow in interest and popularity globally,
its definition among scholars remains unclear, having become so inclusive that it has increased

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the debate on which socially beneficial activities fits (Martin & Osberg, 2007). However, this
study adopted a generally acceptable definition by Bacq and Janssen (2011), who describe the
social entrepreneurship concept as “the process of identifying, evaluating and exploiting
opportunities aiming at social value creation by means of commercial, market-based activities
and of the use of a wide range of resources” (p. 388). Although authors, such as Zahra et al.
(2009) and Moses and Olokundun (2014), maintain the social entrepreneurship concept is a
context phenomenon and its practicality and effectiveness depend on understanding the
particular context in which it is applied.
In the South African context, Elliott (2019) describes social entrepreneurship as “an alternative
model to meet the needs of the marginalised and the vulnerable, while the social entrepreneur
focuses on both a financial and a social bottom line” (p. 1). Mohapelao (2014) describes the
concept of social entrepreneurship as the process or behaviour that uses business or
entrepreneurial elements to strive to address social issues. In addition, Quacoe Yusheng and
Quacoe (2022) mention that “social entrepreneurship is becoming a combination of for-profit
and non-profit initiatives, blending the value and trust of social groups with the efficiencies
and profit motives of business” (p. 32). This increases the belief that vast opportunities exist
for social entrepreneurs to achieve social impact, as the Gordon Institute of Business Sciences
(GIBS) highlights, they are usually placed in local communities such as townships and can
reach underserved beneficiaries, as well as engaging in trade that other institutions are unable
or unwilling to engage with (GIBS, 2018).
Despite many studies, such as Manyaka-Boshielo (2017); Kajiita and Kang’ethe (2020) and
Myres (2020), emphasizing the important role of social entrepreneurship in contributing to
sustainable development and having a social impact in South Africa, the challenges associated
with social impact measurement could be a major hindrance.
Social impact measurement
There have been various attempts by authors to define the concept of social impact
measurement. For example, San Pedro and Ballesteros (2021) describe social impact
measurement as the identification and quantification that measure the changes experienced
both by persons and the planet, due to a specific activity, project, programme or policy, and the
degree to which the agent contributes to these changes. This is in line with the description by
the OECD (2021) that social impact measurement aims to measure the social outcome and
impact created by specified activities of a SE and is an on-going process and integral part of
the enterprise’s activity. In other words, social impact measurement is an important aspect of
social entrepreneurs’ activities, allowing a comprehensive understanding of the effect their
social value creation has on societal challenges being addressed. More so, social impact
measurement is the centre of assessing and comparing social value creation efforts as a result
of venture activity (Flam, 2014). Hence, adequate social impact measurement is critical in
differentiating those social entrepreneurs’ activities that successfully addressed a social
problem and those that did not.

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According to a report by the OECD (2015), the mission of SEs affects multiple stakeholders
(public authorities, private investors, internal stakeholders and external beneficiaries).
Therefore, traditional performance measurement may not be adequate, while a
multidimensional accountability system is more suitable, as it focuses on both the economic
bottom line, as well as social outcomes. In other words, this system will ensure SEs are
accountable to their stakeholders and manage these relationships, while satisfying their set
objectives. The Australian Social Value Bank (ASVB) (2018) supports this view and asserts
organisations that pursue social purpose are not only under pressure to create social value and
positive change in the world, but have to also prove it, with the only way to prove the social
value created, is to measure it. This means social impact measurement can be vital in helping
SEs understand their contribution to solving social problems in local communities such as
townships.
Social impact measurement is important to organisations such as SEs, as it assists to: achieve
their social mission, attract additional funding, provide effective communication of impact to
stakeholders, and use impact to inform programme improvement, as well as help to
demonstrate value for money (ASVB, 2018). This shows social impact measurement cannot be
ignored and needs to be a significant part of every social entrepreneur’s strategy to create value
that will contribute to sustainable development in local communities, such as the townships in
KZN.
Social impact measurement challenges
Buckland and Hehenberger (2021) highlight social impact measurement challenges, as it is
believed the long-term effects of interventions from organisations, such as social enterprises,
involve multiple stakeholders and addressing complex challenges, which makes it difficult to
measure and is easily overlooked. In addition, Gonul and Senyuva (2020) point out the most
common challenges SEs face in developing an efficient social impact measurement are the
difficulties in quantifying their impacts, complications regarding the long-term predictions of
their social impacts, and limitations in the resources required to measure these impacts. This
also supports the findings by Cunha, et al (2022) who identified that lack of stakeholder
awareness in the field of social innovation, difficulties in selecting the metrics to measure
impact, lack of beneficiaries’ engagement and lack of financial and public support are some of
the critical barriers affecting social impact measurement. Furthermore, SEs suffer from lack of
standardization and guidance in choosing the appropriate method to assess their performance,
and that leading methodologies developed to measure impact continue to have their flaws
(Mulloth & Rumi, 2021). Hence, as important as measuring impact is to social entrepreneurs,
these challenges could have enormous effect on their social value creation and ability to
efficiently address developmental issues in local communities such as townships.
Effects of social impact measurement challenges
Social impact measurement is crucial to the growth and development of any SE. However, it
has been highlighted in literature that the challenges associated with social impact
measurement could have enormous effects on SEs achieving their desired goals and objectives.

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Some of the critical effects of social impact measurement are discussed below.
Understanding the level of their activities: It is an important factor that will ensure SEs
understand the level of contribution of their activities, which according to SEFORIS (2013),
provides sufficient information and enables SEs to know the number of targeted beneficiaries
that benefited from their social mission. In a collective manner, social impact measurement
could help provide improved comprehension of the aggregate SE impact that engages similar
social issues within similar geographical areas to achieve greater results (Buckland and
Hehenberger, 2021; Cunha, et al, 2022).
In SA, however, many SEs do not understand the contribution of their activities, due to lack of
information and the inability to differentiate between an output, and outcome and impact
(Methvin, 2019). In a study conducted in Cape Town by Ngatse-Ipangui and Dassah (2019),
weak monitoring and unclear impact measurement are shown to not only affect SEs
understanding the contribution of their activities, but also create the perception that SE activity
outcomes are, furthermore, not sustainable enough to trigger development, with community
members giving up quickly on their operations. This means social impact measurement is vital
for not only SEs but also their beneficiaries, in order to understand the contribution of their
operations to both economic growth and societal well-being. In addition, the lack of social
impact measurement affects SEs understanding of how their social intervention could satisfy
or address the human needs of social wellbeing, such as healthcare and education (Nguyen,
Szkudlarek and Seymour, 2015).
Measuring impact has become a necessity for SEs, with Hadad and Găucă (2014) explaining
“there should be a correlation between the proposed objectives and the actual results” (p. 120).
Hence, for social entrepreneurs’ activities to be considered effective, they need to assess and
understand if and how they are achieving their objectives and improving the wellbeing of
society (Grieco, Michelini & Lasevoli, 2014; Ormiston & Seymour, 2011). In light of the
above, we state hypotheses;
H1: Lack of social impact measurement affects social entrepreneurs’ understanding of their
activities in KZN townships.
Methods/techniques used in addressing social problems: For social entrepreneurs, social
impact measurement is considered crucial in knowing the methods/techniques that can be used
to address social problems and enhance their activities. According to Maas and Liket (2011)
and Cunha, et al (2022), applying social impact measurement depends on requirements of the
different types of corporations, their activities, objectives and the aspects of impact they want
to measure. Hence, lack of social impact measurement could affect the approach or strategy
SEs use to create social value. SEs can use the social impact measurement as an organisational
strategy, for learning purposes and better understanding the environment where they operate
(Arvidson & Lyon, 2014). In other words, the lack of social impact measurement affects SEs’
ability to fully identify loopholes in their social value creation methods/techniques that could
enable improved creative and innovativeness in addressing social issues within an environment
such as the KZN townships.

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Rawhouser, Cummings and Newbert (2019) believe the lack of social impact measurement
hinders SEs rapid progress and effectiveness in the methods/techniques they use in solving
social ills, in turn affecting their operations. Since there is no one-size-fits-all approach to social
impact measurement, the lack of identifying its appropriateness could also affect SE
method/technique to productivity and competitiveness in a dynamic business environment
(Kah & Akenroye, 2020). In SA, the lack of social impact measurement means that the
methods/techniques SEs can use to bring about change remains in the domains of story and
assumption (Harder, 2019). Despite the increase in impact investment in SA, social impact
measurement practice is still lagging, affecting the understanding of the financial and social
returns of these investments (Choda & Teladia, 2018). It is, therefore, important that SEs
improve their use of social impact measurement if they are to identify methods/techniques to
improve performance and enhance their contribution to sustainable development in society,
particularly in the KZN townships. In light of the above, we state hypotheses;
H2: Lack of social impact measurement affects the methods/techniques social entrepreneurs’
use in addressing social problems in KZN townships.
Enable opportunity identification: The ability of SEs to effectively measure, present and
compare their performance is crucial in enabling opportunity identification and sustainable
operations expansion (Flam, 2014; Zain & Hassan, 2023). According to Maas and Liket (2011),
one of the social impact measurement purposes is to assist management with data for investor
oversight and decision-making when identifying business model modification or market
opportunities. In other words, the lack of social impact measurement could negatively affect
owners/managers of enterprises, including SEs, from identifying opportunities to expand their
social value creation and address pressing socio-economic issues in the society. In addition,
SEs’ survival, growth and long-term viability are based on their ability to identify opportunities
within the socio-economic challenges in society; achieved by engaging in social impact
measurement (Field, 2016). In SA, the lack of social impact measurement affects data
availability for businesses, such as SEs, to identify underperformance areas hindering strategy
development to improve scope and address other social problems (UCT Graduate School of
Business & Impact Investing South Africa, 2020). In light of the above, we state hypotheses;
H3: Lack of social impact measurement prevents social entrepreneurs from identifying other
opportunities to solve social problems in KZN townships.
Attract investors: So and Capanyola (2016) highlight due diligence is required from investors
to access the potential social return prior to committing to an investment, and measuring the
social impact after the programme concludes to assess portfolio performance in order to know
whether to reinvest. Many SE funders are beginning to experience “budgetary constraints and
need to allocate their resources more carefully than in the past” (European Commission, 2015,
p. 4), making social impact measurement an important requirement to access funding from
impact investors. More so, in SA, Bev (2011) argues that funder and investor decision-making
is aided by social impact measurement, with a continuous available funds’ reduction. In other
words, SEs in SA operate in a competitive funding environment, requiring them to prove their
impact on investment is greater than the rest in order to secure funding. It becomes imperative

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for SEs in SA to, therefore, identify ways to improve their social impact measurement and
attract investors that will enhance their social value creation and business operations. In light
of the above, we state hypotheses;
H4: Lack of social impact measurement affects the willingness of investors to fund social
entrepreneurs’ activities in KZN townships.

METHODOLOGY
The methodology used for this study will be discussed as follows, namely: target population,
sample size, data collection, data measurement and data analysis.
Target population
The study used a quantitative research method and carried out among social entrepreneurs
operating in Inanda, Ntuzuma and KwaMashu townships in the eThekwini District
Municipality in KwaZulu-Natal province.
Sample size
A total of 90 social entrepreneurs were identified using a snowball sampling technique.
Biographical information of the participants are presented in table 1 below.
Data collection
In SA, social entrepreneurs still lack a specific regulatory framework that governs them and,
as such, their population is unknown, with no specific database for a sample frame to be
constructed (GIBS, 2018; Kajiita and Kang’ethe, 2020; Dzomonda, 2021). This study used
similar inclusion criteria to other studies (Dzomonda, 2021; Akoh and Lekhanya, 2022), based
on the following: the SE has been operating for the past one year, only pursues a social issue
and not personal gain, is registered with the Department of Social Development or intends to
do so in the near future, and is involved in an income generating venture. The researchers
identifies a small number of initial participants, who meet the inclusion criteria and are
requested to recommend other participants, and this goes on until the target sample size or
saturation point is reached (Parker, Scott & Geddes, 2019). The questionnaire was self-
administered by the researchers and 90 were returned, representing a 100 per cent response
rate.
Data measurement
In line with the framework for this study, the questionnaire was used to measure four variables.
It employed closed-ended 5-point Likert scale questions, ranging from 1 (strongly agree) to 5
(strongly disagree) on the effects of social impact measurement challenges on social
entrepreneurs’ activities. This enabled the computation of inferential statistics and mean score.
Data analysis
SPSS version 27.0 was used to analyse the data collected, in order to generate frequencies,
descriptive statistics, and inferential statistics (Chi square test), which were used to test the

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hypotheses. A statistical test was conducted for all questionnaire items and the results show
these to be a good fit for the study (Cronbach’s Alpha = 0.895) > 0.75; thus, accepting internal
consistency and reliability.
Table 1: Biographical information of surveyed social entrepreneurs
Variables Category Frequency Percentage
Educational background Matric 10 11.1
Diploma/Certificate 31 34.4
Degree 19 21.1
Honours 17 18.9
Masters 10 11.1
PhD 2 2.2
Others 1 1.1
Age group 18-25 16 17.8
26-32 33 36.7
33-39 25 27.8
40-49 9 10.0
More than 50 7 7.8
Gender Male 39 43.3
Female 51 56.7
Location Inanda 30 33.3
Ntuzuma 30 33.3
KwaMashu 30 33.3
Type of social enterprise Non-Governmental Organisation (NGO) 16 17.8
Not-for-Profit Organisation (NPO) 26 28.9
Hybrid 13 14.4
Profit oriented 33 36.7
Others 2 2.2
How the social enterprise is Partnership 16 17.8
owned Manager and sole owner 42 46.7
Manager and jointly owned 19 21.1
Others 13 14.4
Years of operation 1 – 2 years 14 15.6
3 – 5 years 35 38.9
6 – 8 years 28 31.1
9 – 11 years 4 4.4
More than 11 years 9 10
Table 1 shows the demographic information of the social entrepreneurs surveyed for this study.
The demographic data are important for this study, as it enables researchers to make data-driven
decisions (Fernandez et al., 2016).

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 RESULTS
The following section discusses results of the effects of social impact measurement challenges on social entrepreneurs’
activities in the KZN townships.
Table 2: Effects on understanding social entrepreneurs’ activities
Frequency Distribution Descriptive Statistics Chi-square Statistics
Statement strongly Strongly % Agree/Strongly p-
Agree Neutral Disagree Mean Std Dev χ2 df
agree disagree Agree value
Lack of social impact Count 29 29 15 11 6 58
measurement affects
social entrepreneurs'
2.2889 1.22927 24.667 4 0.000
understanding of their % 32.2 32.2 16.7 12.2 6,7 64.4
activities in KZN
townships
Source: Researcher’s own data
In terms of lack of social impact measurement having an effect on social entrepreneurs understanding their activities in KZN
townships as shown in table 2, 58 or 64.4%, collectively agreed with the statement. A Chi-square test ascertained whether
social entrepreneurs understanding their activities is affected by lack of social impact measurement. The uniformity in the
expected responses to the question formed the basis of the null hypothesis developed. The results revealed χ2 = 24.667; df =
4; P =0.000 for this variable, indicating that the responses observed differed statistically from the expected responses. This
implies that the null hypothesis is rejected, and this study concludes that lack of social impact measurement affects social
entrepreneurs’ understanding of their activities in KZN townships.

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 Table 3: Effects on the method/technique use in addressing social problems
Descriptive
Frequency Distribution Chi-square Statistics
Statistics
Statement
strongly Strongly % Agree/Strongly Std p-
Agree Neutral Disagree Mean χ2 df
agree disagree Agree Dev value
Lack of social impact Count 21 31 18 13 7 52
measurement affects the
method/technique social
2.4889 1.22010 18.000 4 0.001
entrepreneurs' use in % 23.3 34.4 20.0 14.4 7.8 57.7
addressing social problems
in KZN townships
Source: Researcher’s own data
In terms of lack of social impact measurement affecting the methods/techniques social entrepreneurs’ use in addressing social
problems as shown in table 3, a total of 52 (57.7%) of the respondents agreed with the statement. These finding are supported
by a chi-square test, conducted to determine whether the methods/techniques social entrepreneurs’ use in addressing social
problems in the KZN townships under study are affected by lack of social impact measurement. For this variable, the results
show that χ2 = 18.000; df = 4; P =0.001, revealing that the methods/techniques social entrepreneurs’ use in addressing social
problems in the KZN townships are affected by lack of social impact measurement. Hence, the null hypothesis was rejected.
Table 4: Effects on identifying other opportunities to solve social problems
Descriptive
Frequency Distribution Chi-square Statistics
Statistics
Statement
strongly Strongly % Agree/Strongly Std p-
Agree Neutral Disagree Mean χ2 df
agree disagree Agree Dev value
Lack of social impact Count 27 32 11 11 9 59
measurement prevents
social entrepreneurs
from identifying other 2.3667 1.30212 25.333 4 0.000
% 30.0 35.6 12.2 12.2 10.0 65.6
opportunities to solve
social problems in
KZN townships
Source: Researcher’s own data

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 Regarding the lack of social impact measurement affecting social entrepreneurs from identifying other opportunities to solve
social problems in the townships in KZN as demonstrated in table 4, a total of 59 (65.6%) of the respondents agreed with the
statement. A Chi-square test was conducted to determine whether social entrepreneurs identifying other opportunities to solve
social problems in the KZN townships is affected by lack of social impact measurement. The result for this variable indicates
that χ2 = 25.333; df = 4; P =0.000, which signals the lack of social impact measurement prevents social entrepreneurs from
identifying other opportunities to solve social problems in KZN townships. Hence, the null hypothesis was rejected.
Table 5: Effects on attracting investors
Descriptive
Frequency Distribution Chi-square Statistics
Statistics
Statement
strongly Strongly % Agree/Strongly Std p-
Agree Neutral Disagree Mean χ2 df
agree disagree Agree Dev value
Lack of social impact Count 25 33 13 10 9 58
measurement affects
the willingness of
1.27
investors to fund 2.3889 24.667 4 0.000
% 27.8 36.7 14.4 11.1 10.0 64.5 812
social entrepreneurs'
activities in KZN
townships
Source: Researcher’s own data

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Concerning the lack of social impact measurement having an effect on the willingness of
investors to fund social entrepreneurs’ activities in the KZN townships as shown in table 5, a
total of 58 (64.5%) of the respondents agreed with the statement. A Chi-square test was
conducted to determine whether investor willingness to fund social entrepreneurs’ activities is
affected by lack of social impact measurement. For this variable, the result reveals that χ2 =
24.667; df = 4; P =0.000, which shows a lack of social impact measurement affects investor
willingness to fund social entrepreneurs’ activities in the KZN townships. Hence, the null
hypothesis was rejected.

DISCUSSION
This paper reported on an investigation into social impact measurement challenges and the
effects on social entrepreneurs’ activities in selected KZN townships. The idea was to highlight
the effects of these challenges as a way of finding solutions that will enhance SE activities. The
study findings revealed the challenges of social impact measurement significantly affect social
entrepreneurs’ value creation and their effectiveness in addressing some of the social ills
affecting communities, such as townships in KZN. Furthermore, other existing findings
collaborate the study findings.
Social impact measurement has, for instance, become an important practice for social
entrepreneurs to fulfil not only their external accountability obligations (Molecke & Pinkse,
2019), but also enhance the effectiveness of internal operations. Hence, social impact
measurement provides evidence, in the form of social performance that social entrepreneurs
efficiently combine their social mission with market approaches to address social problems in
society (Rawhouser et al., 2019).
With regards to the specific effects social impact measurement challenges have on social
entrepreneurs’ activities in the KZN townships, many respondents believe lack of social impact
measurement has a significant effect on social entrepreneurs understanding their activities. As
indicated by the study results, most (64.4%) surveyed respondents agreed the lack of social
impact measurement affects understanding their activities. It is imperative to note that
measuring social impact is an ongoing process that helps organisations, including SEs, to
understand the short- and long-term impact on their beneficiaries. Hence, not measuring social
impact can significantly affect SEs aligning their operations with the desired objective.
This finding is supported by other studies, such as conducted in SA by Aucamp (2015), which
revealed insufficient social impact measurement is an obstacle hindering social organisations,
including SEs, from achieving the preferred result of social development. In another South
African study, the Aspen Network of Development Entrepreneurs (2021) posits that lack of
impact measurement in many organisations, including SEs, affects the ability to maximise
activities that have positive effects and mitigates those with negative effects. Van der
Westhuizen (2017) believes, because of the importance social impact measurement has in the
promotion of wellbeing, it requires understanding beyond mere economic indicators, also
accommodating subjective indicators such as psychosocial well-being; crucial in providing the
best possible solutions to social problems in communities. The importance of social impact

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measurement for SEs is needed to understand the social value creation relevant to beneficiaries
and help address social problems in communities such as KZN townships.
Lack of social impact measurement was believed to have a significant effect on the
methods/techniques SEs use in addressing social problems. Respondents (57.8%) agreed it was
a factor affecting SEs activities in the KZN townships. This supports findings by Maas and
Liket (2011), who suggest that social impact measurement is essential for SEs if they are to use
the appropriate methods/techniques to achieve their desired set goals and objectives, as each
social activity requires a particular type or requirement of measurement. In addition, Kah and
Akenroye (2020) mention there is no one-size-fits-all with regards to social impact
measurement, making its role critical in identifying the appropriate method/technique needed
to effectively create social value and address social ills in the society.
In a study conducted in SA by George and Urban (2018), measurement metrics is concluded as
crucial for SEs to make informed decisions regarding each project that will improve their social
value creation and contribution to development in society. Costa and Pesci (2016) believe
ineffective social impact measurement could affect the creditability of the methods/techniques
used by SEs, as stakeholder involvement requires input in defining and constructing the metrics
and, thus, avoid any manipulative intentions for greater impact. Hence, social impact
measurement will enable SEs to present credible and reliable evidence on the
methods/techniques to which resources are used in creating social value that will contribute to
development in communities such as townships in KZN.
SEs are also significantly affected by a lack of social impact measurement as they are unable
to identify other opportunities to solve social problems in the KZN townships, with 65.6% of
the respondents in agreement. This means social impact measurement is important should SEs
desire to improve the scope of their activities, expand their product line and increase their
outcome and impact on society. According to Buckland and Hehenberger (2021), social impact
measurement could help SEs identify more vulnerable groups and assist in developing
longitudinal datasets; aiding advancement of social value creation to more beneficiaries and
communities. In a study in SA by Ngatse-Ipangui and Dassah (2019), unclear social impact
measurement is highlighted to affect SEs in providing adequate evidence of their performance
to the community and in turn, hindering the community from helping to identify other socio-
economic challenges that require assistance. This could be a major setback for SEs in
improving their social value creation and sustainable development contribution in communities
such as KZN townships.
Lack of social impact measurement was also regarded to significantly influence investor
willingness to invest in SE activities, with 64.4% of respondents agreeing it affects their
operations in the KZN townships. This supports findings by Nguyen et al. (2015), who suggest
social impact measurement is crucial to the relationship between SEs and resource providers,
as SEs require investment to improve performance and achieve the objective of creating social
impact for those in need. According to Lee et al. (2019), social impact measurement provides
investors with information that confirms their financial resources are generating the social
impact intended, as well as what went wrong when the social impact was not achieved. In other

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words, lack of social impact measurement may impede SEs in attracting investors into their
activities that can, in turn, affect their social value creation.
In a study in SA by the Aspen Network of Development Entrepreneurs (2021), investors are
found to be the most important audience regarding social impact results and these results need
to demonstrate how organisations, including SEs, are making a difference. Hence, the
importance of social impact measurement to enable SEs attract investors that will enhance their
social value creation in the KZN townships, cannot be overemphasized.

CONCLUSION AND RECOMMENDATION

Since the importance and relevance of social impact measurement is rapidly growing globally
in both the business and social sectors, social entrepreneurs need be made aware that the use
of social impact measurement will enhance their activities in the KZN townships. This study
attempted to understand the effects of social impact measurement challenges on social
entrepreneurs’ activities. The results show social impact measurement challenges significantly
affect social entrepreneurs’ activities. Lack of social impact measurement hinders their
understanding of the pivotal role their operations play in both economic growth and societal
well-being. This study also revealed that lack of social impact measurement affects the
methods/techniques social entrepreneurs’ use to address socio-economic issues efficiently and
effectively. In addition, this lack is shown to impact social entrepreneurs’ ability to identify
opportunities to solve other social problems, crucial to their relevance, growth and survival.
This study also revealed the lack of social impact measurement affects investor willingness to
invest in SE activities, while financial resources remain a vital aspect of SE operations.
It is, therefore, important that social impact measurement challenges are addressed, to allow
social entrepreneurs to be consistent in creating social values that will contribute sustainably
to their development in the KZN township communities. As a result of the study findings, it is
recommended the government needs to do more to promote the use of social impact
measurement by social entrepreneurs. This can be achieved through constant workshops and
training to help social entrepreneurs develop the knowledge and skills. Furthermore, as
encouragement, there should be incentives or rewards for social entrepreneurs who apply social
impact measurement in their activities. Social entrepreneurs should also endeavour to engage
with each other through social networking, as this could help them in utilising social impact
measurement. Finally, they should identify easy to use social impact measurement metrics.
Limitations and Future Research
The study was conducted in three townships in KZN and only focused on 90 social
entrepreneurs. The study did not cover townships in other provinces, although, as a true
reflection of the selected townships in KZN and not SA in its entirety, there are lessons that
could still be learned by social entrepreneurs in the townships in other provinces. Therefore,
the findings of the study should be used with caution. Furthermore, gathering primary data
from participants was achieved through a closed-ended questionnaire that contained
predetermined statements, formulated from a comprehensive literature review and from the

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research objectives, while excluding open-ended questions for additional comments in the
questionnaire. This method, to an extent, limited the researcher’s insights to respondent views.
Further study may be conducted in other townships across SA and with a larger sample size to
determine whether these findings are representative of other townships.

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